The SCHIPs are down, the kids may be out…

HEALTH ACCESS UPDATE
Monday, November 5, 2007

MRMIB TAKES PRELIMINARY STEP IN DISENROLLING CHILDREN FROM COVERAGE
* MRMIB adopts emergency regulations to allow for waiting periods and disenrollment
* President Bush’s SCHIP veto and standoff with Congress creates uncertainty
* CA’s Healthy Families program could disenroll children at their annual reviews
* Children could begin losing Healthy Families coverage as early as December 31

New on the Health Access Weblog: BREAKING: Summary of Nunez’s New Proposal on Health Reform (Analysis Forthcoming); Special Session Update: More Reports from Last Week’s Hearing; Text or Treat; More on SCHIP and MRMIB; Sec. Leavitt’s Blog; GuilianiCare;

In the wake of President Bush’s veto of SCHIP and the stalemate over the reauthorization of the federal children’s coverage program, board members of California’s Managed Risk Medical Insurance Board (MRMIB) on Monday took the first step that would enable the state to put children eligible for Healthy Families on a waitlist, or begin disenrolling eligible children from the program altogether.

Emergency Regulations adopted on Monday can be found here. Healthy Families enrolls approximately 830,000 children in families with incomes between 100% and 250% of the federal poverty level ($20,650 to $51,625 for a family of four).

MRMIB Executive Director Lesley Cummings first broached the topic of creating waitlists and disenrolling children from the program last month after President Bush vetoed legislation that extended the sunset for the State Children’s Health Insurance Program (SCHIP) and would have provided an additional $35 billion over five years to maintain and expand enrollment. SCHIP expired on September 30. Since then Congress and Bush have been at impasse over the program with lawmakers sending the president a largely similar measure to the previously vetoed legislation last week. The new bill is also expected to be vetoed.

Since the September expiration of the SCHIP program, which funds Healthy Families, California has been using up money it has had in reserve from this program. That money, however, runs out on November 16, Cummings said. Healthy Families receives $2 federal dollars for every $1 state dollar put into the program. The 07-08 state budget has appropriated $392 million from the state’s general fund for the program.

Cummings said if the board failed to make a decision and continued operating the program as usual, Healthy Families would run out of money and shut down completely from July 2008 through September 2008.

She and other board members emphasized, ad nauseum, that Monday’s adoption of emergency regulations did not necessarily mean that waitlists would be established or children would lose coverage.

“What we’re talking about today is just the tools to allow MRMIB to take action,’’ said Ruth Liu, who works for Gov. Arnold Schwarzenegger’s administration.

ADVOCATES PLEAD FOR MORE TIME

While advocates who gave public comments recognized Cummings and her staff for their careful stewardship of the program and acknowledged that the under funding of the Healthy Families Program was a problem created at the federal level, all advocates urged the board to take no action to adopt emergency regulations at this board meeting. Instead, advocates asked that the board wait until the actions of the Congress and the President made the policy options clearer.

Their comments centered around the following key points:

* All of the speakers acknowledged that they understood that the board’s action would not result in actually invoking waiting lists or disenrollment actions immediately. However, advocates argued that giving MRMIB the capacity to implement those drastic cost-saving measures was premature at this time. They noted that policy and funding negotiations were ongoing in Washington , and while there clearly were uncertainties, there was still hope for a successful veto override vote or broader support for a compromise proposal.

* Advocates argued strenuously that this was a policy decision more appropriately made by the legislature and the governor, rather than the MRMIB board and the director. There has been recent precedent for the state to step in with financial assistance when problems arose with a federal program. Both the California legislature and the governor did provide financial aid last year during the first year of Medicare Part D, the prescription drug program. They took action when both the new federal law and the many implementation problems resulted in significant delays in receiving their drugs as well as financial hardships for California ’s most vulnerable seniors and people with disabilities.

* Much of the testimony to the board argued for no action until advocates could review the revised emergency regulations. This minor delay would give the director time to consult closely with other states that were facing similar funding shortages regarding their experience. In addition, many felt the board’s decision should at least be delayed until mid-November or preferably the end of the month during a time when the most intense negotiations are being undertaken in Washington which might make these very drastic actions unnecessary. Advocates made several offers to work with MRMIB to pursue additional policy options and remedies to avoid the imposition of waiting lists and disenrollments.

Others also pointed out the irony of restricting coverage for children in the same year that the Governor and Legislature are proposing to reform the health system and expand coverage to millions more Californians – including children.

“I’m a little confused by this conversation,’’ said Angela Gilliard, advocate with the Western Center on Law and Poverty. “To say that we might have to disenroll and limit enrollment seems like this discussion is taking place outside of the health reform discussion in California where we’re talking about expanding coverage’’ to all children.

Board members said they understood angst from advocates, but were torn.

“This is the most abhorrent situation for any of us to be in,’’ said board member Sophia Chang, who works for the Senate Rules Committee. But, Chang said, pleas by advocates to delay a decision “It’s a gamble. To ask us to delay could mean that we have to shut down abruptly’’ causing interruptions in coverage in more children’s lives.

According to independent analysis, the longer the state waits and continues to spend money on the program without assurance from the federal government for additional funding, the more children will be harmed later. If the President had his way with his proposal:
* 260,000 children would have needed to be disenrolled immediately last week (on 11/1), OR,
* 433,000 children would need to be disenrolled by 1/1/08; OR,
* Healthy Families would shut down, and disenroll all 830,000 children 7/1/08.

Deena Lahn from the Children’s Defense Fund and 100% Campaign, said advocates weren’t saying the state should never make a decision. ”We aren’t saying we can wait forever,’’ but Lahn said, “we’ll know more by November 16,’’ and there’s no reason to rush. Since the board’s first meeting on the topic on October 24th, Lahn said MRMIB staff has made positive changes to help clarify the regulations. “There are more improvements to be made,’’ she said.

Other advocates who spoke against the emergency regulations included Health Access California and Community Health Councils, Inc.

However, after minimal discussion, the chair moved and the board voted to approve the emergency regulations. They did adopt one additional provision to revise the proposed regulation to reinstate previously enrolled children first, before new applicants, when funding was ultimately reauthorized.

THE MECHANICS OF WAITLISTING AND DISENROLLING CHILDREN

With Monday’s adoption of emergency regulations, MRMIB can begin as early as December 5, though Executive Director Cummings said any formal actions to constrain enrollment likely wouldn’t start until the end of December.

Responding to critiques from the October 24th meeting that the regulations were too vague, MRMIB also drafted more explicit regulations that explained how waitlists and disenrollment were to unfold.

If the board does establish that Healthy Families does not have enough money, it would:
* First establish a waitlist for new applicants who have not yet been enrolled.
* If the waitlist is not enough, then children’s coverage would be terminated in the month of their “Annual Eligibility Review,’’ the anniversary of their enrollment.

Once, however, money does become available, children who were disenrolled would be re-enrolled in the program, in the order that they lost coverage. After disenrolled children regained coverage, then children on the waitlist, who had not previously been enrolled in the program, could obtain coverage.

For more information, contact the authors of this report, Elizabeth Abbott, project director, at eabbott@health-access.org, or Hanh Kim Quach, policy coordinator, at hquach@health-access.org.

Health Access California promotes quality, affordable health care for all Californians.

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